One of the most profitable and reliable ways to invest money has always been investing in real estate.
The reason for this is the low risks and high liquidity of real estate, as well as the high demand for residential property and commercial premises.
For a successful investment, it is recommended to choose investment objects in large cities, since square meters in them are constantly becoming more expensive.
If there is not enough free financial resources for commercial real estate, then apartments and houses will be an excellent option. Due to their not-so-high prices for relatively large facilities and high demand, they are quickly starting to make a profit.
Types and methods of investing in real estate
There are several types of investing in real estate and only two ways to make a profit:
- Subsequent rental of the acquired property. The most profitable investment option, because, in addition to the subsequent resale of the property, the investor receives a monthly fee from the tenant.
- Resale. An investor can earn by buying real estate at a low cost, and then selling at a higher.
Real estate investing is divided into several types:
- commercial real estate investing;
- investing in residential real estate;
- investment in suburban real estate;
- land investment;
- investing in parking spaces;
- investing in real estate abroad;
- investment in real estate under construction.
Each investor can choose for himself the most suitable investment option. Large investors tend to prefer investing in commercial real estate. Smaller invest money in residential real estate or under construction.
Features of buying real estate for beginner investors
For a person who does not have any knowledge in the field of investment, it will be difficult to begin their activities in this area. By investing their own funds, knowledgeable people do this for a reason, and first thoroughly study the market, region and location, as well as the economic situation of the area where the investment is located.
In order to correctly start your investment activity, it is recommended that you first read the useful book "Investing in Real Estate for Dummies" (Eric Tyson, Robert S. Grizzvold). It will help a novice investor to understand all the issues of interest, as well as to avoid many mistakes.
Investing without investments
Many people who want to buy housing for passive income, but do not have enough of their own funds, ask themselves: “Is there real estate investment without money?” Of course, there is. Moreover, several options:
- Buying a Property with a Mortgage - having bought housing in this way, you can then rent it out, and repay the mortgage with the funds received. In a few years, rental payments will cover the entire mortgage debt, and the property will finally become the property of the investor. In this case, you do not have to spend your own money on the purchase of real estate.
- Purchase of seized property - this method is similar to the previous one, only the investment object is already pledged by the bank. The price of such apartments is much lower than the market, therefore, by purchasing them on credit and also renting out, investors are able to get even more profit.
Thus, starting investing in real estate from scratch, you can not only get significant profits, but also not invest large sums of money. This type of investment is the least risky and is capable of generating good passive income in the future.
Investment in real estate under construction
Investing in real estate under construction is the most risky option due to its unpredictability.
Suppose an investor invested his money in the construction of a new apartment. Suddenly, the developer declares himself bankrupt, or the construction is frozen due to the crisis.
In this case, the investor loses all the invested funds, or simply can not withdraw them for an indefinite period.
In order to avoid such situations, it is necessary to initially choose a developer with a good reputation and a long term of work in this area.
Recently, the following investment scheme for real estate under construction has been most popular: first invested in building a house, then after the construction is completed the apartment is rented, and then sold at market value a few years later. This option brings a good profit.
Commercial Real Estate Investing
This type requires investment of significant financial resources. However, he also has many advantages. Once you make an investment in commercial real estate, you can get passive profit, while not managing the process.
To control commercial real estate, it is enough to hire the necessary specialists, and then superficially control the process of return on investment.
Of course, the process of managing large objects is much more complicated than residential space, but the profit is many times greater. Therefore, if the investor does not own the basics of management and management, he is better off doing investments in non-commercial real estate.
Investing in residential property
This is the least risky type of investment. Once you have invested money in the purchase of an apartment, in the future you can simply rent it out and receive additional income. One-room apartments are in the greatest demand, as they are easier to sell and rent. Therefore, it is better to buy two one-room apartments than one two-room.
When searching for objects for investment, it is necessary to take into account the area in which the apartment will be located, the development of infrastructure, view from the windows, number of storeys and furniture.
Investing in residential real estate also has another advantage, especially for small investors - a small amount of money is required.
Real estate investment followed by rental
As you can see, the methods and types of investment are enough so that everyone can choose the option that suits them. To minimize their risks and increase profits, it is possible for an investor to purchase residential real estate with subsequent leasing.
In the long run, the point is the gradual return on investment, and then in net profit. If the owner of the property wants to sell it at the right time, then he will have time to get additional profit from the rent.
For a more profitable investment, it is recommended to choose a promising area, a convenient layout, repair, and furnishings of the apartment. This investment in real estate is suitable for less risky investors and can pay off in a short time.
Features of investing in Russia
Active investment in real estate in Russia began to develop in the mid-90s. The largest volume of investment transactions occurred in 2005-2006. At that time, buyers were willing to pay more than 10% of the value of the object, if only they would not sell it to others.
However, after the crisis, there was a sharp decline in investor activity.The reason for this was an increase in housing prices by 150% in some regions of the country. This was due to inflation, and not due to falling demand for housing.
Therefore, when choosing investment objects of both commercial and non-commercial real estate, the priority is to give preference to megacities. The best cities for investing in real estate are Moscow and St. Petersburg, where the demand for housing is constantly growing thanks to foreigners who have come to work. Currently, investment in the investment sphere is a priority and highly liquid.
Profitable investment
Analyzing the above types and methods of investment, we can summarize some.
Real estate investing is a very reliable and good way to invest in order to make a profit.
It is less profitable for private investors to purchase real estate on credit than to large developers for the purpose of subsequent resale. High interest rates and long-term payback of the invested object will not give small investors significant profits.
It is better to invest in non-profit housing, as it is subject to smaller fluctuations in value, and demand for it persists even during economic crises.
Investing in real estate without money is also possible abroad, where there are special programs for buying a home. However small private investors They don’t risk investing in other countries, but prefer to have income in their own country.
